Performance Transportation Services — a domestic carrier of new automobiles, sport-utility vehicles and light trucks in North America — announced Tuesday, Nov. 20, that it has entered into a nonbinding letter of intent with Allied Systems Holdings Inc., pursuant to which it would sell substantially all of its assets to Allied for $67 million in cash, plus the assumption of certain liabilities, as well as the issuance of warrants to certain of PTS creditors.
As required under the terms of the letter of intent and in order to facilitate the transaction in a manner acceptable to Allied, PTS and certain of its subsidiaries have filed voluntary petitions for reorganization under Chapter 11 of the U.S. Bankruptcy Code. In conjunction with the filing and pursuant to Section 363 of the Bankruptcy Code, PTS will be filing a motion within the next week for the establishment of bidding procedures to allow other companies to have an opportunity to submit bids through a court-supervised competitive bidding process to purchase the assets being sold. The company anticipates the sale transaction, subject to customary closing conditions, to be completed within 45 to 60 days.
“This transaction represents the best result for our customers, employees and stakeholders,” says Jeffrey L. Cornish, PTS president and chief executive officer. “Our goal is to preserve as many jobs as possible and maximize the value of our estate for our creditors. The sale to Allied does just that. In reaching this agreement with Allied, we are able to secure ongoing employment and benefits for our drivers and mechanics while maintaining superior service levels for our customers.”
PTS, based in Wayne, Mich., is the second-largest transporter of new automobiles, sport-utility vehicles and light trucks in North America. PTS operates under three key transportation business lines, including E. and L. Transport, Hadley Auto Transport and Leaseway Motorcar Transport, which together deliver about 2.8 million new cars and light trucks annually.
Cornish says that the Chapter 11 case and the sale process will have no impact on the company’s ability to fulfill its obligations to its customers and employees. He also emphasized that employees and customers should not notice any difference in operations as a result of the filing or during the sale process. “Daily operations will continue as usual, service center hours will remain the same, and all aspects of the business will go on as before the Chapter 11 filing,” he says. “Our employees will continue to be paid as usual during this transaction.”
PTS also announced it has received a commitment for up to $15 million in debtor-in-possession financing from Black Diamond Commercial Finance, LLC, subject to court approval. The DIP financing will be used to maintain uninterrupted service and delivery of product to PTS’ customers during the completion of the sale transaction, and to ensure payment to vendors for post-petition purchases in the ordinary course.
The decision to seek a strategic partner to ensure the long-term continuation of the company and preserve as many jobs as possible was the result of the rapid demise of the sub-prime market and the continued downturn trend in the automotive industry, which significantly impacted PTS’s revenue and ability to meet its business plan goals, Cornish says. “Today’s action lays the foundation for PTS’s future,” he says. “By aligning with Allied, there will be continuity of service for our customers and a more stable future for our operations.”
